LCQ2: Increasing HK's competitiveness for listings of companies from emerging and innovative sectors
In February this year, the Stock Exchange of Hong Kong Limited (the Exchange) published a Consultation Paper on a Listing Regime for Companies from Emerging and Innovative Sectors in respect of expanding Hong Kong's listing regime, and conducted a one-month public consultation exercise. The paper recommends the adoption of a lower listing threshold for biotech companies, the grant of permission for the listing of companies with weighted voting right structures, and the establishment of a new concessionary route to secondary listing. The Exchange is making every effort to have the new regime implemented within the second quarter of this year. In this connection, will the Government inform this Council:
(1) as it has been reported that the authorities of Singapore and the Mainland are taking proactive measures to attract companies from the emerging and innovative sectors to seek listing in their stock exchange markets (e.g. the Mainland authorities plan to attract, through the means of Chinese depositary receipts, the listing of unicorn enterprises in the Mainland's A-share market, and to speed up the vetting and approval of the relevant listing applications), whether the authorities have assessed if such developments will dampen the desire of companies from the emerging and innovative sectors in seeking listing in Hong Kong; if they have assessed, of the outcome; if not, the reasons for that;
(2) whether the authorities will, on the premise of providing adequate protection for the interests of investors, examine afresh if Hong Kong needs to further open up and improve its listing regime, so as to compete for the listing in Hong Kong of companies from the emerging and innovative sectors; if they will, of the details; if not, the reasons for that; and
(3) given that the Outline of the 13th Five-Year Plan for the National Economic and Social Development of the People's Republic of China published in 2016 put forward supporting Hong Kong to reinforce and enhance Hong Kong's position as an international financial centre, and the State leaders have recently mentioned on a number of occasions about supporting the integration of Hong Kong's economy into the overall development of the Country, whether the authorities need to examine afresh the roles and positioning of Hong Kong as an international financial centre and the measures that the Government needs to take to tie in with the overall development of the Country?
Our responses to the three parts of the question are as follows:
(1) In light of the new economic environment, Hong Kong and other jurisdictions are closely monitoring relevant developments and reviewing their listing regimes, so as to study how to attract the listings of new economy companies.
In Hong Kong, following the publication of the Weighted Voting Rights (WVR) Concept Paper for consultation in 2014, the Stock Exchange of Hong Kong Limited (SEHK) published the New Board Concept Paper in June last year and subsequently the consultation conclusions in December last year. The SEHK also published the Consultation Paper on a Listing Regime for Companies from Emerging and Innovative Sectors in February this year, setting out detailed proposals to expand the existing listing regime to facilitate listings of companies from emerging and innovative sectors in Hong Kong, subject to appropriate safeguards. The SEHK is studying the responses to the consultation paper regarding a listing regime for companies from emerging and innovative sectors so as to decide on the way forward.
In the Mainland, the China Securities Regulatory Commission provided its opinions on the pilot schemes of the innovative enterprises issuing stocks or depositary receipts in the Mainland in March this year, announcing pilot schemes to support innovative companies' listings and issuance of depositary receipts in the Mainland.
In Singapore, the Singapore Exchange (SGX) launched a consultation on a possible listing framework for dual class share structures in February last year, with a view to attracting the listings of new economy companies. The SGX subsequently launched a further consultation in March this year on the relevant matters. Since the proposal is still at the stage of consultation, we are not in a position to comment on it.
The reform of the Mainland's stock market in respect of innovative enterprises is a positive development for the overall economic development of the Mainland. It can expedite the development of the new economy in the Mainland and expand the overall financing market for the new economy sector. Both the Mainland's and Hong Kong's capital markets can benefit from these developments, just as the Mainland's economic development has been providing tremendous opportunities to both capital markets, including the "A+H" listings of many Mainland enterprises seeking to go global in both markets.
Hong Kong has a highly open and internationalised market, robust financial infrastructure facilities, as well as free flow of information and capital, and has been a premier listing platform for many enterprises. With the launch of Stock Connect, Hong Kong's market continues to provide Mainland and overseas investors with greater convenience. The listing regime for emerging and innovative companies could further enhance the attractiveness of Hong Kong's listing platform to issuers from different jurisdictions, thereby strengthening Hong Kong's overall competitiveness vis-à-vis other major international listing venues.
(2) We will continue to keep in view the global economic development and have timely reviews of the listing regimes subject to appropriate safeguards, so as to maintain the competitiveness and quality of Hong Kong's market.
The SEHK has indicated that if the proposed Listing Rules to permit the listing of companies with a weighted voting rights structure are implemented, the SEHK plans to launch a consultation within three months of the implementation of these Listing Rules to further explore the option of permitting corporates to hold weighted voting rights.
(3) The National 13th Five-Year Plan was promulgated on March 17, 2016. A chapter is again dedicated to Hong Kong and Macao (the Dedicated Chapter), which acknowledges the significant functions and positioning of Hong Kong in the overall 13th Five-Year (i.e. 2016 - 2020) development of our country.
In the financial aspect, the Dedicated Chapter has stated our country's support for Hong Kong to reinforce and enhance our positions as an international financial centre, a global offshore renminbi (RMB) business hub and an international asset management centre; and to promote the development of financing in the direction of high-end and high value-added financing. The Dedicated Chapter also supports Hong Kong and Macao to participate in the country's two-way opening up and the Belt and Road Initiative; to encourage enterprises from the Mainland, Hong Kong and Macao to utilise their competitive edges and cooperation in different means to "going global"; and to deepen financial co-operation with the Mainland to expand mutual market access in a faster pace.
Following the policy of "what the country needs, what Hong Kong is good at", the Government will take forward Hong Kong-related policy initiatives under the National 13th Five-Year Plan. Attaching great importance to and capitalising on the opportunities brought by the country's 13th Five Year Plan, the Belt and Road Initiative and the Guangdong-Hong Kong-Macao Bay Area development, we will continue to closely engage the industry and the relevant Mainland authorities to seek more policy headroom for further expanding the channels for two-way cross-border RMB fund flows; expanding and enhancing mutual financial market access arrangement; developing more financing channels and cross-border financial services; and lowering the Mainland market entry thresholds for Hong Kong financial institutions, in order to better leverage our roles as an international financial centre, a global offshore RMB business hub and an international asset management centre.
Apart from promoting financial cooperation with the Mainland and integrating into our Country's development, we will also continue to tap the international market and grasp relevant market opportunities. The Government will maintain the competitiveness and quality of Hong Kong as an international financial centre by refining our regimes timely, promoting market development and enhancing market infrastructures.
Thank you, President.
Ends/Wednesday, April 11, 2018
Issued at HKT 16:15
Issued at HKT 16:15